Whats your opinion????????????????????????????????????????????????????.

To be honest Im getting a little fed up with all this Credit and Margin within the market, as I see it leads to volatility and sideways markets as short - termism leads the way.

Spreadbets, CFDS, T plus and many more are having a very negative effect on the market as I see it, even Winnie and Evil K admitted this last year, whats the solution if there is one? or are we stuck in a circle chasing are arses and tails. Your opinions whatever way, would be most welcome.

cheers GF.

good news would be welcomed gf
but sad to say there doesn't seem to be much
good news around at present i for one have been
battered in the last few weeks and closed a lot of
positions at a loss, wish i could say it is only a
tempory glip but i remain unconvinced the bad news is
over especially where the aim market is concerned
being burnt on the back of a good couple of years
is ok but being badly burnt reminds me of 4 years ago
rather not go there - lets hope the next bull run is not
that far away - as the saying goes no straight lines
now we have had a dip lets hope the only way is up
in the not to distant future
all the best

HUSTLER

Agree with you GF. I read more and more about daytripping and hedging. This inevitabley must lead to intraday swings only as people look to make a buck in a morning. The market used to be much longer term than now and I don't see it changing. Unfortunately for small investers like me, day trading costs make it too expensive to be worthwhile unless I leverage my investment and that is way too risky in a sideways market!

I agree GF. It's the use of CFD'd and spreadbets that's destroying the market. Prices are now driven by traders and not company prospects. The use of derivatives should really be looked at, but I doubt if anything will change.

MS

Sorry folks, but why is it that everyone starts moaning about traders when things pull back?

It's a very different story when traders drive prices up!

Time after time I see threads like this ...... investors blaming everyone else for their own dodgy investment decisions. If you can see a market that looks likes it's going to fall, why the *&^% do you not just open up a derivatives account and short it yourselves instead of blaming others???????

All this provides ammunition for those investors who detest CFD's and their spreadbet cousins and swear they are destroying the stock market. If the regulated market means anything, surely it means that shareholders are entitled to believe that company's prospects, rather than shadowy manoeuvers by traders who appear to have more more money than is good for them, or us?
But the problem is the people who misuse derivatives and distort markets, not the derivatives themselves.

Jeremy Lacey
Editor Shares Mag

Not sure I can agree with post 6 at all.

Trading and derivatives of one sort or another have driven markets since they began. Any percieved damage to a particular stock is more often than not relatively short-lived. As for believing a company's prospects, I strongly believe that long term those always shine through (or not) and if you are an investor rather than a trader, then volatility should not matter.

However, I can see that derivatives can distort things to a certain extent, but I do not believe it is near as widespread as many with an axe to grind would have us believe.

The biggest problem with threads such as this is it gives a mouthpiece to disgruntled shareholders/investors who are still in when their stop-losses should have taken them out, as Hil alludes to.

I was like that once! ;-))

Excelent post Mickey.

I just feel the day of the INVESTOR (not trader) appears to be gone forever. Theres plenty of stock out there and I mean plenty thats at lower prices than it was over 2 year ago or more and a lot of it is stock that is positive earnings enhancing. The stock as moved higher but it as come back down again, hence my terminology are stocks in a vicious circle and are we as investors just chasing our tails. What is causing this phenomenon?, I beleive it to be an over supply of credit within the market.

Glad to see the point of view of the flip side but beleive me I havent raised this question because I am blaming others nor have I not made money over the last few years, its just a far differing market place I now see to that one I entered over 21 years ago and Im not sure that it is for the best in the Financial world especially when pensions are in such a mess.

Any more views please??????????????????????????????.

cheers GF.

hilary - 13 May'05 - 09:12 - 5 of 8

Spot on.

I saw it coming in January, the writing was clear enough even for a numpty like me.

Good advice.

Sorry to say it but no-one can complain really - we aren't
frog-marched to the brokers and made to invest or trade.
We all know the risks - oh please..we should by now!
Ups and downs come and go, it all works in cycles, what seems
to be the prevailing trend now, will change and change again.

If it didn't - would any of us bother to play this game?
If it didn't how could the market continue to operate?
and how would any of us make a profit - it needs movement & change.

On a brighter note not everything is down - if anyone else has
BXTN we're doing pretty good today!
:>)

Seawalker perhaphs some people dont like the idea of shorting stocks and markets. I myself dont and Ive yet to be convinced by any shorter of their argument although I do acknowledge they have been in place since year dot.

My argument isnt against shorting, its against the over supply of credit readilly available in the markets and the use to which it is put.

cheers GF.

I would argue that the majority of people using derivatives are working FTSE 100 and 250 stocks.

For a long time I have maintained that one of the best pointers of general market trend, direction and sentiment comes from the SMX and AXX charts. This is because the derivative interest in smaller capitalised companies is minimal and direction is therefore much clearer and easier to identify.

Here's AXX for 2 years:



And here's SMX:



It's pretty clear from the sma's in both of those charts which side of the line the bulls are sitting, imo, without any interference from derivative traders.

If you pull up the same chart for UKX, you can see that the overall effect is the same, but the price line is much more jagged and prone to short term (daily/weekly) fluctuations:



I would argue that those short term fluctuations are the likely work of derivatives, but the overall price move over a period of time is the work of general sentiment brought about by fundamentals and economic and political conditions.

Excellent charts Hils. I've never seen those ones before. Thanks.

I have to say the new charts on MoneyAM are excellent.
Off topic. I didn't realise untill today that if Glazier gets 75% he could off load debt on to Man Utd. No wonder the supporters/share holders are peed off, as I understand it at the moment their debt free. At least the Russian goes to matches, Glazier has never been to Old Trafford.

MS

Quote from Hillary, "I would argue that the majority of people using derivatives are working FTSE 100 and 250 stocks." ENDS.

Indeed they are and I would also suggest that the direction these stocks take impacts the market as a whole.

The fact is theres just too much credit out there and some companys are becoming playthings, toys for the TAers who in general are the ones with the credit facilities.

Take NLR as an example, its become not an investment but a vehicle on which the day traders and intra day traders are riding up and down at will aided by the MMs who just thrive on the turnover. Theres far more stocks like this one aswell.

Theres no skill no guile to it, just follow the herd one way and then the other. Its gambling and its never seen investment. Hence my header above.

Is this the way the markets are going to be set for the future?, if they are pity the long term investors.

cheers GF.

snoball - See the new charts thread at the top of the "Room". They are exceptionally good.

GF - wasn't having a dig at you personally. I'm well aware of your ability to stockpick extremely successfully and do understand your position as an "investor".

Al

Hi Big AL,

no problems, Im not saying I am right or wrong I just wanted to get the general feel of how people think investing will go in the future aided by all these new investment tools like CFDs etc and I have no doubts we shall see even more.

cheers GF.

I think the main cause for the market being as it is, is due to political and economic anxieties or instabilities.

I think the effect of the Iraq war on oil prices, the actions of America and Britain in trying to dominate the international scene, with future barely concealed military or subversive intentions make the economic present and future unpredictable.

The American economy is on the wane and, although still mighty, will be more and more dependant, in the short term at least, on the oil producing states, who will act more and more as America and Britain are doing now, in their own interests. Ie. increase their wealth and influence by raising the price of their main commodity ie. oil.

I think America can huff and puff for a while longer, maintaining their threats but ultimately, as the emerging nations economies become more efficient, it will be their own economy which will defeat them.

I think in the past investment for many was seen by many way of gaining financial rewards by investing in a company paying increasing yields and some share price growth, perhaps and hopefully, investing in some shares which will show these returns in the future.

The market now seems to be more dependant on short-term increase (or fall) in share price.

This accounts for the increase in the use derivatives (bought on margin) in one form or another on a short-term basis, which may be safer than long-term investing.

Long-term investment seems increasingly risky.

A lot of the present instability in the market is due to Bush, Blair and their cohorts future actions being unpredictable. (North Korea, Iran, Middle East in general.) We owe them a lot.

However, if I had enough courage and thought myself smart enough, I might try to utilise derivatives in on form or another.

goldfinger,

I'm not sure if I didn't explain myself well enough, but the point that I was trying to make with the 3 charts is that derivatives might influence markets over a very short period of time (as seen by the jaggedness of the UKX price line, compared to the relatively smooth AXX line), but they won't influence an underlying trend over a sustained period of time.

You could conversely argue that the increased use of derivatives serves to increase liquidity within the market place , thereby tightening spreads and removing some of the volatility which is a feature of thinner trading. In which case, are derivitives not beneficial to all participants?

One thing I don't like is this so called shorting, correct me if I am wrong but how can it be fair to borrow shares to short something when you don't know if there will be sufficient shares to fill your order when it gets to the level of buying.
I certainly don't like to think my shares have been borrowed by some twit who is shorting the company who's shares I have bought and paid for.

I know, caveman. Shorters are the scum of the earth and hanging would be too kind to them. They should be made to watch Tottenham play every week for a year ....... they'd soon change their evil ways then!

:o)

;-)

Steady on Hilary... Spurs have been playing some good stuff under Martin Jol. Ok so there's a long way to go but we're getting better. This weekend is going to be fascinating. Who do you fancy for the drop. I'm not a Soto fan but I do have a lot of respect for Harry.

Anyone who shorts has got to have ****'s of steel. I only wish I did, and have the expertise to do it. There's a lot of money to be made if you call it right.

MS

And a lot of money to loose if you don't.

Too true Fred.

Have a good one.

MS

i have not read through all these postings...but in answer to the original question the answer is certainly "YES"....and that is borne out by the fact that the average time a share is now held is but a fraction of the time a share was held 50 years ago

someone may have the exact number of those days !!!!!!!!!!!!!!!!!!!!!!

spivs will eat themselves. hopefully. sadly the pi and new business suffers.

Just got in from pub,not a good idea to post comment but...........For a start very good thread GF.
In my opinion there are two ways that this is going:

1. Invest in a share that you think is going to do well and ride out the storms that will follow.

2. Don't bother researching a new company that has promise and may come good because in the short term it will be shorted,if there is nothing to back it up now.

Is it a good thing then,that having the ability to short a company due to over exposure on hope,will then keep the share price at a more realistic value over a period of time?Is this the modern way or has it always been so?

In my ignorance,I thought if enough people invested in a company they thought would do well (over say the next year or so)then that was it!!How wrong I have been...to find out that there are people gambling on the failure of that company ie.lack of positive news in the short term.Then having the buying power to bring a company down to make a profit......well it blows my mind.If the company doesn't deliver then people sell that is my point,not banking on a company failing before it starts so to speak.
I can see both sides of the coin but all i can see is the small investor loosing out.
It would be interesting to hear a view from a company that has been shorted and how it effected them in any way(especially long term)!

just me ramblings.night

The market has been irrational and paranoid for as long as it as existed. The trick is to act in a manner than takes advantage of it rather than be steered by it. At the end of the day the market is a quotation tool not a valuation tool and therefore as long as you are not over leveraged you should take advantage of this fact.

With historically low interest rates it is unlikely that asset valuations will have a smooth ride for some time as the various economic factors revert to someting closer to normality.

I don't think you would expect anything better from the market when in my opinion the country is led by short-term spivs. Attitudes of the masses are created by their leaders.

Have a look at www.comstockfunds.com
article
What You Think You Know That Isn't So

In the late 1990s we wrote a lengthy report with the above title at a time when investment advisors, strategists and economists were exclaiming that all one had to do was ignore the stock market fluctuations, invest in stocks at any time, and watch your nest egg return an average of 10% per year. We pointed out that although there was a kernel of truth in the argument, investors were actually running great risks in buying stocks at excessive valuations near the end of secular bull markets. Although valuations are somewhat lower than the ridiculous heights reached in early 2000, the cyclical bull market since October 2002 has once again put the market in a position where the risks of losing money--or at least not making anyare once again very high.



The kernel of truth in the long-run thesis is that U.S. stocks really have returned about 10% a year on average over the very long term. There are two factors,

Good post jumpin.

Im still yet to be convinced by the flip side that the markets in small caps especially, are being led by nothing other than credit punters.

cheers GF.

Over the long term small caps have outperformed large caps but are much more volatile. However long term thinking is not for the highly leveraged.

It's time that the government stepped in and stopped all this gambling with the companies that are running the country, the pensions and the profits/losses of small/medium/large investors. The sooner the shorters, longers and whatever elsers moved back to horses, dogs and left shares alone the better. What's all this I've been reading about hedge companies? Another 1998 crash?

Good point on pensions Angi. I suspect the shorters who take the market down are only thinking short term, what a shock they will get when they get their final pension summary.

cheers GF.

http://www.moneyam.com/action/news/showArticle?id=789943

Interpreting the market's language.

Not quite what is being discussed, but..............

I think it has go for another push for a great dive.....round autumn. A red auttumn

Never read so much twaddle in all my life. There have always been shorters, and there needs to be to make a market. Who else provides the other side of the deal when you want to go long ? No, don't tell me, it's someone selling you their shares because they're altuistic and want to share some of their profit on the long side with you.

Hotei. I partially agree with you, but I think 10 years ago shorting and going long was less common and then generally on the larger capitalise companies and therefore had little effect on the overall movement of the share price and the market in general. I think it is unlikely to change and as you state we are only making money at someone elses expense. (But we only notice our own pain when we are loosing, like to-day S-d IT! Majority of shares blue but the red ones hurt.

Fred - I agree that the ability to short, for the small trader, is something that relatively few had access to until recently with the advent of CFD and spreadbet instruments. But now we have them we are on a more even footing with the big boys, and I think that is good. It's too easy for people to blame others (shorters, market makers, analysts, "de-rampers" etc) when their investment decisions turn out to be "not so good" the market is as the market is - people need to learn to live with it and benefit by it, or move on to do something else with their money.

The big boys are gradually moving into Bonds well away from the volatility of this market with all its credit tools.

What we are really seeing at the moment is one of the downsides of the consumer credit bubble burst. People have overspent, they now have to pay back what they owe, theres less money being invested in the markets.

As for Hotei, Im sorry but this remark is totaly wrong "Never read so much twaddle in all my life. There have always been shorters, and there needs to be to make a market. Who else provides the other side of the deal when you want to go long ?"Ends, err hotei for every buyer there is a seller, selling in the convential way is not the same as shorting, and shorters are not needed to make a market, sellers are.

cheers GF.

GF - self-evidently, there must be a seller for a buyer. However, a seller doesn't necessarily have the assets he is selling at the time the trade takes place.

Hence you answer your own mistaken assertion and you have a shorter in the above case. Anyway hotei my initial post is not just against people going short it also covers them going long aswell on credit.

I beleive the amount of credit in the market place now leads to far bigger swings both ways and directly leads to the volatility we have seen since the end of the last Bear market. I hope you dont take my post as offensive its not intended to be. I really just want to know how people feel about these new tools in the market place and also their likely effects on shaping markets in the years to come.

cheers GF.

Hotei - How dare you tell me to get used to it or move onto something else. I've been investing for years, recently supplimenting my pension. I have absolutely no desire to "move onto spread betting, cfds, horses or dogs".

Spread betting is great for someone like me who can't afford to buy shares in the FTSE 100 or on the New York Stock exchange.
But then the amounts I bet are so small they are hardly likely to affect the market. Also I only bet with cash on deposit.
Is it ok for me to carry on? :-)